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When should I do it?

If you're just finishing college, you'll want to consolidate your loans after you graduate but before your grace period ends, so that you can take advantage of the lower in-school interest rate (the 91-day T-bill rate plus 1.7 percent, rather than the standard repayment rate of T-bill rate plus 2.3 percent). Timing is everything: You'll need to complete all the paperwork and have it processed and approved before repayment begins. The downside is that your grace period will end once your consolidation loan goes through. If you've already been paying off your loans for a while, you can consolidate at any time.

How can I get the best interest rate?

The interest rate on your consolidation loans is the weighted average of the interest rates on the loans you have now, rounded up to the nearest 1/8 of a percent and capped at 8.25 percent. Confused? You can get help doing the math with an online calculator at the Federal Direct Consolidation Loans website. Click on "Borrower Services," then "Online Calculator." Interest rates are determined by the federal government and change each year on July 1, so check with a lender to get their take on possible rate fluctuation.

Can I consolidate more than once?

Current law dictates that you can only consolidate once, so if you consolidate at a 6 percent interest rate and rates later drop to 3 percent, you're out of luck. There are two exceptions: if you've since gone back to school and acquired new student loans, or if an outstanding loan was excluded from your original consolidation. In those cases, you may be able to have another go at it.

Can I bundle my student loans with my spouse's?

Yes, a married couple can jointly consolidate their loans, but it may not be a good idea. To do so, you'll both have to agree to assume full responsibility for payment of the debt. So if your marriage ends in divorce, your loans will still be living together and one ex-spouse will be held responsible if the other refuses to pay up. You also won't be able to get an in-school loan deferment, because both of you would have to be enrolled to qualify.

Will I lose the interest subsidy on my subsidized loans?

No. Although your existing loans will be packaged as one larger loan, your subsidized and unsubsidized loans are grouped so that you won't be held responsible for extra interest on subsidized loans.

How is loan serialization different from consolidation?

With loan serialization, a single lender buys your student loans and "stacks" them; you maintain your original terms and interest rates, but pay the loans off one at a time, starting with the loan with the worst interest rate. Unlike with refinancing, serialization won't lock in a good interest rate. Perkins Loans cannot be serialized.

What fees can I expect to pay?

You shouldn't pay origination or any other fees to get a consolidation loan.

How do I apply for a consolidation loan?

Most lending institutions, including the federal government, offer both online and paper applications. If you have all Direct Loans, you can even apply by phone. Besides basic personal contact information, you'll need to be able to provide data on the type of loan you have, its balance, and the current loan holder. You'll also be asked to provide your employer's name and contact information, the name of your school, and the names of a few references, such as professors or employers. Ask the lender you've chosen for an application, complete it, and then wait for them to send you the paperwork to sign. Go over everything carefully for accuracy, because the lending institution will check to verify that the information you provided is true. Once your loan has been approved, you'll receive notification and a new repayment schedule from your new loan holder.

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